Market Review

• Stocks in the Asian region were mostly higher following the positive upward trend in the overnight US. The Hang Seng Index surged strongly by 2.25% hitting the 2-year high zone, while Nikkei 225 increased 1.05%. Meanwhile, Brent crude oil managed to stabilize near US$55.

• Generally, sentiments on the local bourse turned positive after the fresh record closing on Wall Street, snapping the 10-day losing streak; the FBM KLCI ended higher by 0.28% led by Genting Malaysia and Petronas Gas. Market breadth, however was slightly negative with 410 decliners vs 405 gainers. Meanwhile, market volumes were above 2.0bn mark at 2.18bn.

• Wall Street extended its record highs led by automakers after data suggested the major automakers beat US vehicle sales in September as consumers within the hurricane-affected zone rushed to replace flood damaged vehicles. The Dow and S&P500 advanced 0.37% and 0.22% respectively.

Technical View

Poised for a downward channel breakout

• After forming ten declining candles, buying interest emerged and the FBM KLCI rebounded above 1,755 and the MACD Histogram has turned green. Meanwhile, the RSI and Stochastics oscillators remain in oversold position. The FBM KLCI could breakout from the downward channel and retest the resistance of 1,765- 1,770. Support will be located around 1,750.

Market Outlook

• With the fresh record highs were formed over the past few weeks on Wall Street, we think investors are still upbeat about the recent economic data and the upcoming jobs data. Also, traders could be monitoring a few Fed's speaker statements this week for further clues in the upcoming interest rates hike decision.

• On the local front, we think the bargain hunting could extend today with the help of the positive spillover from US overnight performance, coupled with the return of foreign buying yesterday. The KLCI could rebound towards 1,770 over the near term. We expect traders to position themselves ahead of the release of Budget 2018, which is expected to be expansionary and market friendly.

Source: Hong Leong Investment Bank Research - 4 Oct 2017